Georgia Department of Law, from the office of Samuel S. Olens, Attorney General

PRESS ADVISORY

Attorney General Olens Announces Settlement of Kickback Allegations Against Novartis Pharmaceuticals

February 22, 2016

Attorney General Sam Olens announced today that Georgia had received all settlement proceeds related to a December 2015 civil settlement agreement reached with Novartis Pharmaceuticals Corporation ("Novartis"). Novartis, headquartered in New Jersey, is a subsidiary of the Swiss pharmaceutical company Novartis AG. The settlement resolves allegations that Novartis provided kickbacks to certain specialty pharmacies in exchange for those pharmacies’ recommendation of two of its drugs, Exjade and Myfortic. Under the settlement, Novartis paid $390 million to the United States and over forty states, and Georgia received more than $4.1 million.

Attorney General Olens said, “Medical decisions, such as which medication a patient should take, should be based on impartial medical advice, not influenced by the payment or receipt of kickbacks. This case reflects my office’s continued commitment to investigating allegations of Medicaid fraud and abuse and litigating those cases when necessary to represent the best interests of Georgia taxpayers.”

The settlement stems from a whistleblower lawsuit, U.S. ex rel. Kester, et al. v. Novartis Pharmaceuticals Corporation, et al., No. 11-CIV-8196, which was filed in the United States District Court for the Southern District of New York. The State of Georgia intervened in the lawsuit along with ten other states and the United States. The litigating states filed a multistate complaint against Novartis in January 2014, and have been actively litigating the case since that time. 

The settlement resolves allegations that between 2007 and 2012, Novartis paid kickbacks in the form of patient referrals and rebates to three specialty pharmacies – BioScrip, Inc., Accredo Health Group, and US Bioservices – to induce those pharmacies to recommend Exjade refills. Novartis selected the specialty pharmacies to be part of a closed distribution network through which most Exjade prescriptions in the United States were filled and allegedly pressured the pharmacies to emphasize Exjade's benefits and downplay the severity of Exjade's side effects to induce refills. 

Novartis was not the only defendant in the litigation. Prior to today’s announcement, two of the specialty pharmacies named as defendants in the case, BioScrip, Inc. and Accredo Health Group, Inc., agreed to pay $15 million and $60 million, respectively, to resolve claims that they accepted kickbacks from Novartis to promote Exjade. Georgia received more than $300,000 from the BioScrip settlement and close to $700,000 from the Accredo settlement. 

Assistant Attorney General Elizabeth White represented Georgia in the litigation in cooperation with the Georgia Department of Community Health. The Georgia Medicaid Fraud Control Unit, a division of the Attorney General’s office, undertakes criminal and civil investigations and prosecutions of Georgia Medicaid providers engaged in fraud and abuse. To report suspected Medicaid Fraud or patient abuse to the MFCU, call 404-656-5400 or email report_medicaid_fraud@law.ga.gov

 

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